A common language to discuss and describe the digital economy, a system consisting of products and services, technologies, business models, and infrastructure.

Written by Max Schulze, published April 24, 2024.

Overview of the Leitmotiv Taxonomy of the Digital Economy, which is a diagram in three different colors describing each layer of the digital economy.

In the modern digital economy, we often label Google, Meta, Netflix, and Amazon as technology companies, but they are more accurately digital product and service companies. Compared to Oracle, which used to sell specific digital technologies like its proprietary database, these firms offer products and services built upon proprietary or open-source digital technologies but are not selling the technologies themselves.

Composition of Digital Products

Three key elements form the foundation of a digital product or service:

1. Business Model: Varies from pay-per-use, subscription, freemium, or advertising-based models, among others.
2. Digital Technologies: They can be proprietary or open-source and include software and hardware.
3. Digital Resources: This term refers to the main resources needed for a digital product, including data processing (computing), storage, and transfer capacity provided by digital infrastructure.

The Internet's Dual Role

The internet is the marketplace for digital products and services to reach customers, both individuals and businesses. Telecommunications providers, internet exchanges, community network operators, and others operate it.

The internet is the means through which digital products and services acquire the digital resources they need to function. It serves as both a marketplace (its societal function) and a transport network (its technical function).

This can be compared to railroads, which can bring customers to shops (e.g., subways) and goods to the shop (e.g., cargo trains).

Framework of Digital Infrastructure

Digital resources are created and transported through digital infrastructure, similar to how electricity is generated and transported using electrical infrastructure. This digital infrastructure has three main layers:

Digital infrastructure, like electrical infrastructure, includes mechanisms for creating and transporting digital resources. It is made from three components:

1. ICT equipment, which includes server equipment for data storage and processing, and networking equipment for data transfer and connectivity.
2. The ICT equipment is housed in a building commonly called a data center (misleadingly, it should be called a data storage, exchange, and processing facility). These buildings are specialized warehouses for computers and networking equipment and provide the commodity inputs for the generation of digital resources – including power, cooling, and connectivity.
3. Land, connectivity, and electrical power form the third layer, representing the physical inputs (aside from the materials and resources used to produce the ICT equipment) required for digital infrastructure to operate.